Sambutan Retreat Sesi Pertama APEC Economic Leader`s Meeting

REMARKS
H.E. DR. H. SUSILO BAMBANG YUDHOYONO
PRESIDENT OF THE REPUBLIC OF INDONESIA
AT THE
RETREAT - I
ASIA-PACIFIC ECONOMIC COOPERATION
ECONOMIC LEADERS’ MEETING
(APEC 2008 SUMMIT)

LIMA, 22 NOVEMBER 2008



My Dear Colleagues,
May I join the voices around the table in thanking our host, Peru, for the excellent preparations for this Summit and for the warm hospitality accorded to us.

Excellencies
Since our last meeting in Sydney, we have faced various challenges including climate change, food shortage, skyrocketing price of oil, and the current financial crisis. Some countries have been hit hard; others – like Indonesia – have been relatively spared. But no one is immune to the crisis. There is a clear need for joint coordinated action and increased partnership among APEC member economies.

In response to the global financial crisis, we are all bracing for difficult times for the next 2 or 3 years, or perhaps even longer. Many of the leaders here took part in the G-20 Summit that was held a few days ago in Washington DC. The G-20 Summit is a good start, and has outlined a good plan of action with a clear time-table. The messages coming out of that Summit are very clear, and Indonesia supports them. We must act in concert and in coordination with one another to restore confidence, ease liquidity, safeguard the real economy, and protect the poor. We must reform the international financial architecture. We must allow greater voice for developing countries and emerging economies, in the international economic decision-making system. We must not and cannot resort to protectionism. We must also reach a breakthrough in Doha.

Nationally, since the start of the crisis, my Government held intensive consultations with the corporate sector, economists and other stakeholders. Our goal is to minimize its impact on Indonesia as well as to maintain the growth momentum that we have achieved so far. We moved in quickly and comprehensively with a response package in three main areas that include: 1) reassuring financial markets and restoring liquidity, 2) adjustments in our fiscal policy and 3) creating a favourable policy environment through incentives to sustain exports and investment for longer term growth.

Regionally, within the framework of ASEAN Plus Three, we need to accelerate the multilateralization of the Chiang Mai Initiative, which aims at creating a network of bilateral swap arrangements (BSAs) among ASEAN+3 countries to address short-term liquidity difficulties and to supplement existing international financial arrangements.

I fully suggest, that, we, in APEC, must work in concert to weather the crisis and still promote economic growth and sustainable development of the APEC region by carrying out the Regional Economic Integration agenda.

We must also enlarge and intensify our cooperation in all economic sectors as well as intensify our trade and investment relations and take vigorous measures to stabilize our financial markets.

We must coordinate our actions in key areas such as macro-economic policy formulation, so that they can more effectively prevent or respond to any global financial crisis.

At the same time, we should keep sending positive signals to the global financial community that our economies are working closely to mitigate the impact of the global financial crisis on our region.

Excellencies,
The food shortage could certainly undermine our efforts to alleviate poverty and could worsen economic and social problems in the region. The poorest families in our region will suffer the most from its severe effects.

Although the situation appears difficult, I am still confident that it is manageable and that we can solve it. It is clear to all that the world needs a boost in food production. An increase in agricultural productivity worldwide is therefore imperative. We must ensure adequate world food supplies on the long run. In such an endeavour, APEC can play an important role.

In this connection, I suggest the following points :
• First, we must call for massive investments in agricultural technologies, as well as economic and technical cooperation to boost agricultural productivity. For this purpose, the private sector and the research community must vigorously inter-link. A framework for an active regional partnership on food security, emphasizing agricultural investment, could also be established.

• Second, the region needs an environmentally friendly second Green Revolution. Through this scheme, agriculture will be the core of the development agenda. For this purpose, developed economies must share their know-how and advanced technology and gear their aid and trade policies toward boosting food production and establishing an effective food distribution system. The first Green Revolution allowed food production to keep pace with worldwide population growth. The second will help some 100 million people worldwide avoid sliding back into poverty. I am pleased that, with vigorous revitalization of agriculture and rural development in the past 3 years, Indonesia has now achieved rice self-sufficiency, producing 60 million tons of dry grain production this year. As we intensify rice production, Indonesia would be in a position to supply our partners in the region.

• Third, APEC must remain faithful to its commitment to open markets and to trade and investment liberalization. The rise in food prices has amplified the urgency of efforts to attain substantial improvements in market access and a reduction of market-distorting protectionism in global agricultural trade.

• The conclusion of the WTO Doha Round with an ambitious and balanced outcome by the end of this year will be crucial to our efforts at overcoming the food crisis. On the other hand, restrictions on food products export will only worsen the crisis by pushing up global food prices and discouraging investments in agriculture that is urgently needed now to increase future production.

• And fourth, we can immediately identify and provide for the short-term requirements of the crisis. As recommended by ABAC earlier this year, APEC should develop concrete actions to implement the concept of an APEC Food System. At least six elements should be covered in addressing this issue, namely sustainable food production, conducive food market and food trade, food reserves for emergency relief, surveillance and prevention of the incidence of hunger, diversification of food resources and food industry development.

• These four actions, I believe, will pave the way to the building of a regional food security framework that can boost regional food stocks and production. Hopefully this will lead to food price stability in our region.

Distinguished APEC Leaders,
When we last met in Sydney just a few days after the DDA trade negotiations resumed last year, we were optimistic that the negotiations would achieve significant progress.

Unfortunately, the negotiations once again ran smack against a wall. Our ministers persevered and endeavoured a few months ago to move the negotiations forward but still the negotiations stalled.

Excellencies,
I feel that more than ever before, the DDA negotiations need to be completed sooner than later—because of three concerns: First, a total failure of the DDA negotiations will mean that we have failed to redress the inequities and imbalances in world trade. Indonesia has been consistently and vigorously advocating the creation of a more equitable multilateral trading system based on a balanced outcome of the DDA.

Second, another impasse in the DDA negotiations will make it harder for us to meet Goal 8 of the Millennium Development Goals—which calls for an open, rule-based, predictable, and non-discriminatory financial and trading system. An acceptable outcome of the DDA negotiations will greatly help us achieve the MDG targets. This brings me to my third concern.

The global financial crisis we are facing today will have adverse impacts on the real sectors, with the worst consequences breaking out two or three years from now. The real sectors, however, have already begun suffering the impacts. This is shown by a trend toward lower demands for export products, rescheduling of shipments, and a worrisome increase of cancellations of existing orders. In Indonesia alone, this trend has forced manufacturers to slow down their production. If the situation persists, manufacturers will be forced to scale down production and lay off workers. World Leaders have to work together to save the world financial system from total collapse. But that massive effort will be less meaningful if it is not complemented by an equally aggressive effort to create a multilateral trading system that is more equitable, balanced and responsive to the needs and concerns of the developing world.

Colleagues,
The last point that I wish to share is that a successful completion of the DDA negotiations could save millions of people around the globe especially in developing countries from falling victims of a collapsing global financial system and an unbalanced multilateral trading system.

In the current situation of the financial crisis, it is important for leaders to send a strong signal of their political commitment to ensure that there can be the necessary flexibilities to reach convergence on the outstanding issues.

APEC economies, representing 50 percent of world trade and around 60 percent of global GDP, are in a strategic position to make a difference. The situation calls upon us to act now to make the difference between a world that is tossed around by waves of one crisis after another, and a world that is successfully addressing the issues of poverty and development toward a more equitable Pacific prosperity.

Thank you